***** TA Update (intra-day) *****
The market tried to capitulate this morning but didn't get close enough according to my criteria. There is no trigger to it as well. In the last half hour, the market has rallied as trading curbs were put in.
The Nasdaq a/d is 1/3, u/d vol 1/7, on moderate volume of 588M shares which projects to only around 2B shares, shy of what one would expect on a capitulation day. There is a chance of course that the volume would accelerate if the market declined precipitously to reach climax proportions.
The NYSE a/d is 2/7, with u/d vol 1/7, on 479M shares, which projects to around 1.6B shares, which is moderately high.
The Nasdaq still appears likely to retest 1387 to 1400 and the S&P 500 to retest the 950 to 965 area. The Dow could drop to below 9200 if we capitulate and it could drop over 300 points in a capitulation day.
The market could capitulate later today, but if it does not retest those areas, then we could delay it until next week.
A few of my criteria for capitulation are a tick well over -1000, Nasdaq TRIN well over 5, a/d of worse than 1/3, up/down volume worse than 1/15, on heavy volume. There are other criteria as well.
The NYSE market internals should be about 70% of the extreme levels of the Nasdaq.
And remember that if we get capitulation, it needs a major key reversal to accompany it to confirm it as a probable bottom for the intermediate term.
And that there is never a guarantee that the market will hold the retest levels. If we get to those levels without capitulation, the odds of breaking down well below support is high. If we capitulate near those levels and then make a key reversal, then the market has a good chance of holding that low.
When panic sets in (which doesn't feel like it now) and you get too scared to go long for fear of prices dropping forever, then sentiment may be bearish enough and sellers may have been washed out enough. Otherwise, it is just another reset.
Good trading and best wishes,
Dr.Bob |
